And fails: what did you expect?
“There are businesses and households all round the country who borrow either to invest or because they are borrowing for a mortgage. What’s important, and anyone who’s got a mortgage will tell you this, is not the stock of the debt it’s your ability to pay it back.
“And the debt interest payments that Britain has are lower than in the entire period when Margaret Thatcher was in power.”
Fails because he\’s noting the wrong point.
What was nominal base rate in the Thatcher years? Eyeballing it, anywhere between 8 and 18%.
What is nominal base rate today? Why, I do believe that it\’s somewhere around 0.5%.
Now children, do you think you\’ll be paying less in interest when interest rates are one sixteenth of what they used to be? One 36 th? You know, even if the debt itself, the stock, has risen, do you think that the flow, what you\’ve got to pay out each month might fall?
Yes, you would wouldn\’t you.
And what will happen when interest rates rise from their currently deliberately reduced levels? You know, after we get back to an interest rate consistent with long run economic conditions? You know, a real interest rate of one or two percent perhaps? Which with inflation at 2-5% (depending upon how you measure it) means nominal base rates of say 4-7%?
Do we think that on our newly wonderfully large stock of debt that our flow of interest payments is going to remain below historical levels?
No children, I don\’t think we do.
And remember kiddies, Will Straw worked in the Treasury under El Gordo and he\’s going to be a Labour MP one day. Weren\’t we and won\’t we be lucky little people to have such an economic genius lording it over us?
Uncle Timmy just wants to remind you that lamp posts and hempen are too good for the lot of \’em.